Chile: First a brutal revolution, then the Chicago Boys' economic miracle

SANTIAGO, Chile -- The meeting of Chilean President Eduardo Frei with President Clinton in Washington this week signals the arrival of this former pariah nation of South America to a position of eminence shared by few other countries in the world.

Chile is almost certain to be the next country to join the North American Free Trade Agreement. Or it will sign a bilateral free trade arrangement with the United States, a status enjoyed only by Mexico, Canada and Israel.

President Clinton endorses the idea, as did President George Bush before him.

Clearly Chile has come a long way, from despised dictatorship to a probable partnership with the world's leading economic power. In fact, some people regard what happened here over the past two decades as a miracle, an economic explosion that changed the nature of the country, if not the people.

For others, people like Ximena George-Nascimento, the miracle was more a nightmare. She spent the first year of the transformation of Chile in prison. What she recalls of that time, before she fled the country in 1974, were "beatings and beatings," mock executions, "more beatings." Then she endured years in exile.

Even today, when she rides on Santiago's Metro, she can't help but suspect that some of the victims of Gen. Augusto Pinochet -- some of those several thousands whose whereabouts are still unknown -- might be buried in the concrete beneath the rails.

"It would have been a good place," she says with a shudder.

The subway was just a long ditch through the heart of Santiago in 1973, when, on Sept. 11, General Pinochet laid siege to the Moneda, the presidential palace, causing the suicide of the elected Socialist president, Salvador Allende.

As the world turned away from Chile, the general consolidated his power and held on to it for the next 17 years, until, in 1989, the Chilean people told him in a plebiscite they had had enough.

In 1990 civilians regained control of Chile's government.

Sept. 11, 1973, was a pivotal date in the history of this country.

Since then, Chile has become something of an economic wonder. Its annual growth rates of 6 percent over the past decade exceed those of every other country in Latin America and those of most in the rest of the world. More foreign investment flows in here today than into Hong Kong or Taiwan.

The invitation to President Frei, his scheduled lunch at the White House, conversations with leading U.S. businessmen and Cabinet members, are a measure of the warm relations between Chile and the United States.

They weren't always this way.

Though elements in the United States fearful of Allende's socialism were thought to have contributed to bringing on the coup, Washington's relationship with Chile turned sour shortly afterward in response to the barbarity of the repression. They worsened during Jimmy Carter's administration, with its strong human rights emphasis.

The improvement leading to the present friendship began during the Chilean recession of 1983-1984, according to Riordan Roett, director of Latin American and Caribbean Studies at the Johns Hopkins School of Advanced International Studies. "It developed when the first signs of political opening were seen," he said.

"For us it is very vital to have such a [free trade] accord," said President Frei in a recent interview here. "In the short range it wouldn't signify much change in Chile. In the long range it would mean greater recognition in the world."

How did this little country of 13 million reach this eminence? What did it all cost?

The answer to the first question is complicated. The second is easier: the cost was high in terms of economic dislocation, suffering, even death. For General Pinochet changed life as Chileans had known it.

Immediately after the smoke cleared over the Moneda, he banned political parties and crushed the trade unions. Thousands of Chileans were swept into prisons, tortured, murdered. Thousands more escaped into the embassies in Santiago, then into exile.

The general closed the play of politics in Chile entirely, smothering democracy in this country, which had known little else in its 184-year history.

Since the poor and working class constituted the bulk of President Allende's constituency, General Pinochet directed most of his wrath toward them: He ended unemployment insurance and cut public health services; he slashed public education funds at every level.

He then turned to a group of economists at the Catholic University, disciples of the University of Chicago's Milton Friedman. He chose them, says a Chilean diplomat who asked not to be named, not because he had much knowledge of Dr. Friedman's free-market ideas, but because in a country run by Socialists, they were never consulted and so had no political taint.